Way back in November, still under the Bush administration, I wrote a column documenting how a moral hazard was being created and the slew of negative unintended consequences that stem from government actions, were most assuredly coming in the wake of a capital infusion in the automotive industry.

As it looks now, the Obama administration has definitely one-upped Bush in the game to see who can destroy the American economy the quickest.

President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.

Hedge funds and investment managers were irate at Obama’s description of them as “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

“Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair,” said one executive who spoke on condition of anonymity because of the sensitivity of the matter. “What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting.”

George Schultze, the managing member of the hedge fund Schultze Asset Management, a Chrysler bondholder, said, “We are simply seeking to enforce our bargained-for rights under well-settled law.”

“Hopefully, the bankruptcy process will help refocus on this issue rather than on pointing fingers at lenders,” he said.

This is extremely reminiscent of how Obama told the biggest banks in the nation that they would take his TARP money whether they wanted it or not, as to insure a ‘level playing field.’

However, If the POTUS strong arming private citizens and corporations wasn’t enough evidence of how negative government intervention is, try this.

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration’s Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration’s Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation. […]

Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler. […]

Perella Weinberg Partners, Lauria said, “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.”

After direct government intimidation to get their way, who do they reward?

Which brings us to another disturbing aspect of the government’s dealings: its unabashed and unwise attempts to tilt the scales in the unions’ favor. The government proposed giving the United Auto Workers’ retiree health fund a 55 percent equity stake in Chrysler—more than the combined stakes of Chrysler’s merger partner, Fiat, or the other creditors that are owed roughly $7 billion. At GM, the plan is for the union to take a 39 percent slice—a rich reward for years of work rules, health care and pension deals that contributed mightily to the company’s financial woes.

Obama has said he hopes to get out of the car business soon, and he has urged private investors to replace the government as the source of ongoing funds. But no executive in her right mind would take that gamble when it is clear that, in dealing with the government, private capital will always take a back seat to politically powerful entities. Bankruptcy—which everyone has dreaded until now—may prove an unlikely balm. Chrysler filed for Chapter 11 last week, and GM may be facing a similar fate. At least in this arena, long-established rules, and not political favoritism, will play a pivotal role in deciding who gets what. It will also bring some business discipline to decisions that will shape the companies—and, I hope, enable them to pay back every red cent I’m owed.

I am glad that after a call for entrepreneurs and investors to “step up and take a stake in the nation’s economy” were answered, this is how they are rewarded for “evil speculation.” More to point, I am glad the unions, which were a leading cause of the destruction of the U.S. automotive sector through the Legacy expenses are now going to be running the company as a majority shareholder.

The real question is, how long before they are going to need another bailout?